BISA Magazine - Quarter 2, 2017 - 27

'We have not seen a generation since the
Silent Generation' that is so interested
in life insurance protection and in wealth
protection, McDonnell said.

tory. What's different now is the growing
importance [to banks] of non-deposit fee
income." That has been the case since
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010.
With that as a backdrop, Philadelphiabased Penn Mutual Life Insurance Company's announced in late 2016 that it
had entered into a definitive agreement
to merge with Vantis Life Insurance
Company, "a deal that will expand Penn
Mutual's presence in the life insurance
industry by leveraging Vantis Life's
bank-focused distribution model," according to the press release. As a result
of this deal, Vantis Life will become a
wholly-owned affiliate of Penn Mutual,
a mutual life insurer since 1847.

anks have struggled for
years to "break the code"
when it comes to selling
life insurance to retail customers. Many bank investment programs still don't get even 5
percent of revenues from life insurance.
Peter Tedone has seen "instances of
market brilliance" on the part of a
handful of banks when it comes to life
insurance. "A few have been exceptionally good at writing life insurance," said
Tedone, president and CEO of Vantis
Life, based in Windsor, Connecticut.
That is not the norm, however. Most
banks and credit unions continue to focus on annuities and single premium life
insurance (an annuity-like product), both
of which promise larger and more immediate revenues. "So life insurance takes a
back seat," Tedone said. "But that's his-

Why bank-sold life insurance, and
why now? BISA Magazine spoke with
Tedone and Eileen McDonnell, chairman and CEO of Penn Mutual, in
mid-January.

A conservative
generation
Look at the millennial generation,
McDonnell said. "We have not seen a
generation since the Silent Generation"
that is so interested in life insurance
protection and in wealth protection -
a very conservative generation from a
personal finance standpoint that represents a "different client" for banks, she
said. If financial institutions can reach
this segment with the appropriate products and technology, like accelerated
life insurance underwriting, it might
make a big difference.

From Vantis Life's perspective, the deal,
announced in October 2016, should
mean a financial ratings enhancement, Tedone said. Vantis has a much
lower capitalization than Penn Mutual
(surpluses of $82.3 million versus $1.9
billion, respectively, as of June 30,
2016). Capitalization plays a big role in
rating assessments.
An insurer's financial rating matters
when it comes to bank distribution,
too, Tedone continues. A mid-size or
regional bank will often accept an Arating from an insurance carrier, but a
super-regional or money-center bank
may not. They may require a rating
of A or A+ (as well as ratings from
more than one agency; e.g., A.M. Best,
Moody's, and S&P).
Even though Vantis Life (A.M. Best:
A-) has distribution agreements with
more than 150 banks and credit unions,
including some large regional banks, it
hasn't really had access to most of the
largest institutions, those with more
than $75 billion in assets.
"We anticipate that Penn Mutual's
financial strength and solid ratings with
the three major rating agencies will
open new distribution opportunities for
Vantis Life," Tedone said.
Penn Mutual, for its part, is one of only
12 life insurers to maintain a rating of
A or better by A.M. Best for over 75
years - making the list for 88 consecutive years. It is currently rated A+
(Superior) by A.M. Best, Aa3 (Excellent)
by Moody's and A+ (Strong) by Standard & Poor's.

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BISA Magazine

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